---
title: What is an interest rate?
description: A rate of interest charged on a mortgage loan, commonly referred to as the cost of borrowing money. Mortgage interest rates can be fixed or variable.
---

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# What is an interest rate?

## A rate of interest charged on a mortgage loan, commonly referred to as “the cost of borrowing money.”

An interest rate is a rate of interest charged on a mortgage loan, commonly referred to as “the cost of borrowing money.”

**The two main components of a monthly mortgage payment are principal and interest.** The interest portion of the mortgage payment will be **based on the interest rate.**

Mortgage interest rates are volatile; they rise and fall with the market until they are “locked in” on a property with a fully signed purchase contract. **Mortgage interest rates can be either [fixed](https://www.jvmlending.com/glossary/#fixed-ratemortgage) or [variable](https://www.jvmlending.com/glossary/#adjustable-ratemortgageorarm).**

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